Charley’s Family Steak House (A)

Introduction
Charley Turner owned four family steak houses.
Customers went through a cafeteria style line to place their orders.
Turner utilized the customer comments and suggestions to make continuous improvements.
Mr. Turner would manage the unit himself until operations had achieved the ―Charley‘s Style of friendly
customer service and consistent, high-quality food.
Charley‘s Family Steak Houses did not serve breakfast.
Mr. Turner was thinking about including breakfast at Unit No. 2.
The chain‘s ranged in price from $1.99 for a side salad to $16.99 for a lobster dinner.
Menu prices were reviewed semiannually by Mr. Turner.
Charley was becoming frustrated with the challenges of managing Unit No. 4
He scheduled budget planning meetings for 2008 with each manager, and he
viewed these meetings as opportunities to influence their thinking.

Evaluation of Case
2008 Operating Plan – Verified
Gross Sales
Meals: 200,200 (3,852x52)
Lunch Revenue (200,200x40%x$7.50) $600,600
Dinner Revenue (200,2000x60%x$10.50) 1,261,260 $1,861,860
Net Sales
Lunch Revenue (200,200x40%x$7) 560,560
Dinner Revenue (200,200x60%x$10) 1,201,200 $1,761,760
Food (1,861,860x55%) 1,024,023
Labor
Cooks (4x2,000hrsx$13) 104,000
Cashiers/Servers (200,200x$0.48) 96,096 200,096
Other Operating Expenses (1,861,860x8%) 148,949
Contribution $388,692
Advertising (3.5% of gross sales of entire chain) 65,165
Miscellaneous (Fixed) 3,000
Depreciation ($2,000x12) 24,000
Insurance (same as in 2007) 9,400
License and Fees ($11,250x104%) 11,700
Rent ($6,000x12) 72,000
Rent Overage{(1,861,860-1,800,000)x5%} 3,093
Management (Given) 95,000
Profit $105,334

Gross Sales
Meals: 192,400 (3,700x52)
Lunch Revenue (192,400x40%x$7.50) $577,200
Dinner Revenue (192,400x60%x$10.50) 1,212,120 $1,789,320
Net Sales
Lunch Revenue (192,400x40%x$7) 538,720
 Dinner Revenue (192,400x60%x$10) 1,154,400 $1,693,120
Food (1,789,320x55%) 984,126
Labor
Cooks (4x2,000hrsx$13) 104,000
Cashiers/Servers (192,400x$0.48) 92,352 196,352
Other Operating Expenses (1,789,320x8%) 143146
Contribution $369,496
Advertising (3.5% of gross sales of entire chain) 62,626
Miscellaneous (Fixed) 3,000
Depreciation ($2,000x12) 24,000
Insurance (same as in 2007) 9,400
License and Fees ($11,250x104%) 11,700
Rent ($6,000x12) 72,000
Rent Overage ( Gross sales less than $1,800,000) 0
Management (Given) 95,000
Profit $91,770